Your Source For Benefits

Group Benefit Taxation

The following table illustrates the income tax treatment of employee benefits.

Benefit

Cost Tax Deductible to Employer?

Employer Contributions Taxable to Employee?

Employee Contributions Eligible for Tax Deductions or Credit?

Benefit Taxable When Received?

Accidental Death & Dismemberment

Yes

Yes

No

No

Group Life Insurance

Yes

Yes

No

No

Short-Term Disability

Yes

No

No

Yes/No**

Long-Term Disability

Yes

No

No

Yes/No**

Extended Health Care Plan

Yes

No*

Yes

No

Dental Plan

Yes

No*

Yes

No

Employee Assistance Plan

Yes

No

No

No

Registered Pension Plan

Yes

No

Yes

Yes

Registered Retirement Savings Plan

N/A

N/A

Yes

Yes

Deferred Profit-Sharing Plan

Yes

No

N/A

Yes

Canada/Quebec Pension Plan

Yes

No

Yes

Yes

Retirement Compensation Arrangement

Yes

No

Yes

Yes

WSIB Benefits

Yes

No

N/A

No

Employment Insurance

Yes

No

Yes

Yes

Provincial Health Plan

Yes

Yes

No

No

* Yes for Quebec

** Yes, if any part of the short-term or long-term disability premium is paid by the employer. No, if the entire short-term or long-term disability premium is paid by the employee. Where the costs of the short-term or long-term disability plan are shared between employer and employee, the employee is entitled to receive benefits equal to his/her contributions on a non-taxable basis.

Harmonized Sales Tax (HST)

The federal government charges HST on the administration fees for ASO plans.

Provincial Premium Tax (PPT)

Ontario charges 2% Provincial Premium Tax on the cost of group life and health benefits.1

Alberta charges 3% Provincial Premium Tax on the cost of group life and health benefits.

Quebec charges 3.3% Provincial Premium Tax on the cost of group life and health benefits.1